“Google Inc., undaunted by a short-lived attempt to market and sell smartphones on its own, is now trying the approach with tablet computers in a quest to capture market share from Apple Inc.’s AAPL -1.26% iPad,” Amir Efrati reports for The Wall Street Journal. “The Internet search company will sell co-branded tablets directly to consumers through an online store like rivals Apple and Amazon.com Inc., according to people familiar with the matter. The move is an effort to turn around sluggish sales of tablet computers powered by Google’s Android software.”

“Like the Nexus One, some future Android tablets are expected to be co-branded with Google’s name, said people familiar with the matter,” Efrati reports. “The company is expected to sell devices from a variety of manufacturers. Google won’t make the devices and its existing partners such as Samsung Electronics Co. and AsusTeK Computer Inc. 2357.TW -0.90% will be responsible for the hardware, these people said.”

“By selling tablets directly to consumers, Google is upping the ante against Apple, which debuted its market-leading iPad two years ago. Android-based tablets made by Samsung and others have been slow sellers by comparison,” Efrati reports. “Last fall research firm Gartner estimated Apple would capture 73% of the tablet market versus 17% for Android… Google is seeking to increase adoption of its Android software so that its search, maps and other services—which generate the vast majority of its mobile revenue through the sale of ads—become mainstays in the mobile-device world.”

Efrati reports, “To boost the prospects of its new online tablet store, Google was considering subsidizing the cost of future tablets in order to compete on pricing with Amazon’s Kindle Fire, said one person with knowledge of the effort.”

24 Comments

Comment navigation

I guest Google is reading the tea leaves at the local cafe. Their market is subject to the same forces that crippled Rim. The moment Apple goes into maps like google The vast flood of search data from Apple iOS devices is history. Say bye bye Google.

so they give away android phones to get anybody to use ’em…
they create a wide open app market for anybody to do anything they want…
realizes their mobile ad revenue comes 80% from iOS users…
and see apple is planning their own mapping program with loss of some of that 80% revenue likely to follow….
come up with an idea to release a tablet to hold on to the current market of users who provide 20% of their revenue…
…sit in meeting after meeting and finally decide..”golly, if apple has been so successful with the iPad, we sure can if we get our moles and folks to study how they did it…”
…while apple steams ahead, leaving google and its’ android friends grasping for breath….and wondering what the next thing apple is going to do that they are going to have to react to.
seems they’re a reactive company from stem to stern, proactive being an attitude they can’t get their heads around they’re so busy trying to stay relevant.

Oh, great. Have a problem with your counterfeit iPad and call Google. Assuming you ever get anyone on the line, they tell you to call Samsuck, Suckorola, or whoever built the POS, and then the builder tells you to call your carrier, and the carrier sends you back to Google. That’ll really win lots of loyal customers.

They should adopt a little truth in advertising. I’ve even come up with a nice slogan:

So it appears that Apple remains the only company that is able to make a sustainable profit from selling tablet computers. Everybody else is either selling them at a loss as some sort of vanity project, or because of a huge miscalculation with regards to their product’s true worth, or because they hope to offset the loss by means of some other business, such as selling content or advertising.

The longer term problem for all these companies is that they are in uncharted waters. Nobody knows if it’s possible to sustain a business selling tablets at a loss and relying on an associated revenue stream to make it profitable overall.

Apple is in the unique position of making a tremendous profit on the hardware together with modest profits from content and advertising. It’s hard to see where the wannabe tablet distributers are going to make their money. If their content is priced too high, Apple’s content will become even more attractive, if the advertising revenue is overpriced, advertisers will move elsewhere. It really doesn’t leave a lot of wriggle room.